Stamp Duty

Johno64

Hi,
Looking for some advice re Stamp duty.

I am in the early stages of buying a house for £319,250, which will give me a tax bill of nearly £10,000, like all we want to try and reduce this if possible.

I have read on a few sites stating that some companies can save you nearly half your bill, obviously I'm very skeptical.

Can anyone advise if this actually works & is it legal??

Thanks

BoGoF

Doesn't work and isn't legal...

lordbase

It can work if done properly and is almost always legal. Professional promoters would not be recommending that their clients do something illegal.

It generally works by exploiting loopholes in the legislation and although some of the schemes I've seen have flaws the vast majority are based on sound principals.

There is a very big difference between taking advantage of badly drafted legislation, acting in accordance with it to minimise your tax burden and acting illegally.

The only thing I would say though is that the most robust SDLT mitigation tends to starts at £500,000 so I'd be sure to chose which provider you use carefully.

00ec25

lordbase wrote: »

It can work if done properly and is almost always legal. Professional promoters would not be recommending that their clients do something illegal.

I know this is an old thread now but this comment really bugged me

Yes agreed they would not promote an illegal activity, but the fact remains SDLT mitigation schemes are fraught with risk and often unravel - this can be some considerable time later and the adviser will seek to hide behind their contract to limit their exposure when HMRC come after the buyer for the tax , but the buyer has no defence against HMRC and it is the buyer who has to pay the tax not the adviser

this thread makes sobering reading
https://forums.moneysavingexpert.com/discussion/3324460

- the buyer now faces £000 of interest charges from HMRC for "late" payment of SDLT because his chosen scheme has been rejected by HMRC and the buyer is now looking to sue the adviser who said there was “no risk”

lordbase

Apologies if it bugged you, but I was equally bugged by someone suggesting that something that I promote to my clients is illegal and ineffective.

I do appreciate that there are a number of negligent advisors out there that are promoting SDLT schemes that are flawed and push through dozens if not hundreds looking to make a fast buck and then disappear. One of the problems is that the vast majority of accountants and so called "SDLT consultants" are not tax specialists, do not know the subject at all and rely entirely on a number of tax agencies such as PAB and Cornerstone.

However, I work with SDLT lawyers that prepare bespoke arrangements tailored to the client's circumstances. They have identified the flaws in most of the mass marketed schemes and have amended their schemes in a way which makes them much less risky, but there is still a risk.

We always advise clients that there is a risk that they will be enquired into. Although I would still say the chances of HMRC successfully challenging the planning is next to zero (the two specialists I use have never had a successful challenge by HMRC). However, if the client is at all risk adverse then we recommend against undertaking planning. There is no hard sell and we don't want unhappy clients.

On top of that we recommend that the client either invests the SDLT saving or puts it into an offset mortgage for the duration of the enquiry window to mitigate any interest charge in the very unlikely event of an enquiry and the even less likely event of it being successful. We do of course warn the clients of the ramifications such as interest and penalties (although it's a defence under the act to have taken competent legal advice, so the chances of penalties again are minimal). The fees are also contingent on success, so if, for some reason, they do loose their fees are recovered (we don't rely on "insurance policies" like some firms - where the insurance co is unlikely to ever pay back the fees).

So while I appreciate there are cowboys out there looking to rip off everyone they can (even if they don't realise they are doing it in the case of the accountant), we should not all be tarred with the same brush. Because some of us do take client care very seriously.

FTBFun

lordbase wrote: »

We always advise clients that there is a risk that they will be enquired into. Although I would still say the chances of HMRC successfully challenging the planning is next to zero (the two specialists I use have never had a successful challenge by HMRC). However, if the client is at all risk adverse then we recommend against undertaking planning. There is no hard sell and we don't want unhappy clients.

What do you mean by an enquiry? The checks HMRC can do within 9 months of the SDLT form filing date? Or the 6 YEARS afterwards that HMRC can open disclosure proceedings? Most promoters only refer to success as being past the former, not the latter.

lordbase

We make clients aware of both the 9 month enquiry window and the 6 year discovery assessment window.

However, as we provide a bespoke service we ensure that all appropriate disclosures are made to ensure that there is nothing for HMRC to discover.

Consequently we would strongly contend that any discovery assessment raised after the 9m enquiry period would be invalid.

FTBFun

lordbase wrote: »

We make clients aware of both the 9 month enquiry window and the 6 year discovery assessment window.

However, as we provide a bespoke service we ensure that all appropriate disclosures are made to ensure that there is nothing for HMRC to discover.

Consequently we would strongly contend that any discovery assessment raised after the 9m enquiry period would be invalid.

Fair enough.

I'm still far from convinced by these schemes TBH, but at least you appear to do it differently than most providers (and I assume are more expensive!)